Australia Q1 GDP Growth Below Forecasts


The Australian economy advanced a seasonally adjusted 0.4 percent in the first quarter of 2019, accelerating from a 0.2 percent expansion in the previous period but missing market consensus of 0.5 percent. A rise in government spending and a rebound in exports offset a slowdown in household consumption and a decline in fixed investment.

Government spending rose 0.8 percent (vs 2 percent in Q4), led by national non-defense (2.4 percent), national government consumption (1.4 percent) and state and local government consumption (0.4 percent). Meanwhile, household spending slowed to 0.3 percent from 0.4 percent in the last quarter of 2018, reflecting a reduced spending on recreation and culture (-0.5 percent), hotels, cafes and restaurants (-0.4 percent) and clothing and footwear (-0.6 percent). In contrast, expenditure increased in insurance and other financial services (0.6 percent), health (0.7 percent), electricity, gas and other fuel (1.8 percent) and food (0.3 percent). 

Gross fixed capital formation shrank 0.7 percent (vs -1 percent in Q4), due to private investment (-1 percent) driven by ownership transfer costs (-13.0 percent) reflecting the slowing housing market, while gains were recorded in non-dwelling construction (2.1 percent). On the other hand, public investment grew 0.4 percent, led by state and local general government (3 percent), partially offset by national general government (-4.8 percent) and state and local public corporations (-3.7 percent).

Total inventories went up AUD 460 million following a rise of AUD 1,048 million in the prior period, driven by retail trade and manufacturing inventories. 

Exports of goods and services went up 1 percent (vs -0.5 percent in Q4), as sales of goods advanced 0.7 percent, boosted by rural goods (6.5 percent) which was partially offset by non-rural goods (-2.5 percent) and sales of services increased 2 percent. Imports of goods and services fell 0.1 percent (vs 0.4 pct in Q4), mainly due to lower purchases of services (-1.4 percent). Imports of goods rose 0.3 percent, of which consumption (3 percent) and capital goods (1.2 percent) while intermediate (-2.7 percent).

By industry, output rose faster for wholesale trade (0.9 percent vs 0.8 percent in Q4), financial and insurance services (1.2 percent vs 0.1 percent), administrative & support services (1.7 percent vs 0.4 percent), and other services (1.8 percent vs 0.2 percent). Additionally, output rebound in manufacturing (0.7 percent vs -0.7 percent); and electricity, gas, water and waste services (1.2 percent vs -1.3 percent). Also, output shrank less for agriculture, forestry and fishing (-0.2 percent vs -4.4 percent); construction (-0.9 percent vs -2 percent); accommodation and food services (-0.2 percent vs -0.4 percent); and rental, hiring and real estate (-0.4 percent vs -0.6 percent).Meanwhile, growth eased in mining (0.1 percent vs 1.5 percent); transport, postal and warehousing (0.2 percent vs 1.3 percent); information media and telecommunications (0.7 percent vs 2.4 percent); public administration (0.6 percent vs 2.4 percent); and healthcare and social assistance (1.2 percent vs 2.2 percent). In addition, education advanced 0.5 percent, the same pace as in previous period.

Through the year to the first quarter, the economy advanced by 1.8 percent, the weakest growth rate since the Global Financial Crisis, after a 2.3 percent expansion in the last quarter of 2018.

Australia Q1 GDP Growth Below Forecasts


ABS l Rida Husna | rida@tradingeconomics.com
6/5/2019 11:58:27 AM